Stocks Stage a Strong Rally on “Turnaround Tuesday”; Is a Base-Building Process Beginning? - Chaikin Analytics

Stocks Stage a Strong Rally on “Turnaround Tuesday”; Is a Base-Building Process Beginning?

US equities were sharply higher in Tuesday trading, ending at the highs of the day due to a strong afternoon rally on hopes of a fiscal policy response from Washington to address slowdown fears stemming from the spreading coronavirus. All sectors finished higher. Technology, Financials and Consumer Discretionary were the best performers. Health Care, Consumer Staples and Utilities lagged. Treasuries were weaker with the curve steepening. The dollar was stronger on the major crosses. Gold ended down 0.9%. WTI crude closed up 10.4%.

  • Outperformers: Tech +6.60%, Financials +6.04%, Consumer Disc. +5.38%, Industrials +5.22%, Energy +5.00%, REITs +4.94%
  • Underperformers: Utilities +1.01%, Consumer Spls. +2.93%, Healthcare +3.47%, Materials +3.93%, Communication Svcs. +4.53%

S&P futures are down 1.9%, giving back some of yesterday’s gains. Asian markets were weaker overnight with Japan, South Korea and Australia all down over 2%. European equities are moving higher. Treasuries are stronger with the curve steepening. The dollar is weaker on the major crosses. Gold is up 0.2%. WTI Crude is down 2.8%.

Stock of the Day – Cigna Corporation (CI) – Very Bullish Rating

Cigna Corporation (CI) has a Very Bullish Chaikin Power Gauge Rating and has seen the intensity of its relative strength increase as the market has sold off. The OB / OS Indicator is moving higher from an oversold position and Chaikin Money Flow is turning bullish. CI has regained the rising long-term trend line and has price-based support in the $175 – $180 range. Above $170, the stock is likely to continue to outperform.    

The Chaikin Power Gauge Rating for CI is Very Bullish due to very attractive financial metrics, very strong earnings performance, very strong price/volume activity and very positive expert activity. CI’s earnings performance is very strong as a result of high earnings growth over the past 3-5 years and consistent earnings over the past 5 years.

Pre-Market Movers

Advancers: DXC (17%), KOS (6%), LNG (5%), MRNA (2%), GILD (2%)

Decliners: SABR (9%), OXY (8%), LDOS (8%), CCL (6%), ESTC (5%)

Mid-Week Market Update

The SPDR S&P 500 ETF (SPY) has a Neutral + Chaikin Power Gauge ETF Rating but continues to outperform the broader IWV (Russell 3000 ETF). The fund remains oversold based on our indicator and Chaikin Money Flow is bearish. SPY is below the declining long-term trend line and has a bearish Power Bar Ratio.   

Near-term support is in the $270 – $280 range while resistance is in the $300 – $310 range. We note that the long-term trend line is now moving lower, signaling that the current oversold condition may not be conducive to becoming overly aggressive on the long-side of the portfolio.    

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